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Innovation, corporate style

Four Innovation Lessons from Anheuser-Busch.
(Thanks to Lager Heads for the, well, heads up).

It’s popular to write that [fill in the name of a large brewing company] could replicate any beer in the world if it really wanted to. But could it? Would its corporate culture let it?

Think of any innovative beer you cherish popular beer of the moment (amended 2.13.2010 to make the conversation about beer rather than marketing terms) — last weekend it might have been Pliny The Younger, this weekend Red Poppy 2010. Think these beers are a result of a “team” getting together, a bunch of test batches, focus groups, middle managers and upper managers signing off on everything?

Or one person, could be a single crazy and could be a few like-minded we-work-together collaborators, saying screwitthiswillbegreat?



16 Responses to Innovation, corporate style

  1. First Stater February 12, 2010 at 4:14 pm #

    Could they? Of course, it’s only beer. Would they? Probably not. Too foreign to their customer base.

  2. Tim February 12, 2010 at 4:34 pm #

    First Stater nailed it. There is no technical reason why they could not.

    And to get back into the innovation topic, how exactly are Pliny the Younger and Red Poppy innovative? Its certainly not the first wood aged sour beers with cherries. Yes, I’ve been drinking Ron’s kool-aid, which is in fact St. Bernardus Abt.

  3. Pivní Filosof February 12, 2010 at 4:45 pm #

    Agree with the above. There are very capable people brewing for the macros and who knows what sort of stuff they put together in their labs, but they aren’t the ones running the company, and those beers would never get past the accountants…

  4. Stan Hieronymus February 12, 2010 at 5:57 pm #

    Tim – If you look back you’ll see I don’t throw the word innovation around without consideration and would be happy to debate those examples BUT what I typed was “think of any innovative” beer you want. It could even be the Abt 12, descendant of Westvleteren 12, one of the first beers to use dark caramelized sugar to add all those flavors yet result in a well attenuated “digestible” beer.

    If a mega brewery could make that beer – which commands a premium price – why don’t they? Or what have they introduced comparable?

    There is more to brewing than being technically capable. There’s inspiration.

  5. Tim February 13, 2010 at 8:27 am #

    “All our words from loose using have lost their edge.”
    -Ernest Hemingway

    I take issue with the language, not the beer. The beer drinker part of me doesn’t give a damn if a beer is innovative. It’s the pedant in me that is annoyed by that word. You more than implied that those two beers are innovative. I say they are not innovative. That corporate link demonstrates the overuse and abuse of the word. I call for a banishment of the word “innovation,” as it no longer has meaning.

  6. Stan Hieronymus February 13, 2010 at 9:02 am #

    OK. I won’t use the word innovative (I even crossed it out) if you’ll answer my question:

    If a mega brewery could make that beer (St Bernardus Abt 12) – which commands a premium price – why don’t they?

  7. Derrick February 13, 2010 at 9:19 am #

    “If a mega brewery could make that beer (St Bernardus Abt 12) – which commands a premium price – why don’t they?””

    If you divide the profits of St. Bernardus Abt 12 by the profits of InBevAB, the result is probably a rounding error in the revenues of InBevAB. So to really have any business impact, innovations at InBevAB are more in the form of wringing more efficiencies from their manufactuing or business practices, or earn some incremental increase of market share of their mainstream brews. Going to the effort of developing a St. Bernardus Abt 12 clone would probably have a lot less impact on their bottom line than these business innovations.

    I don’t mean to criticize InBevAB for this. That’s just the business reality they are working with.

    Besides, if InBevAB did come out with a St. Bernardus Abt 12, how many of us would actually purchase it over the original one?

  8. EddieGlick February 13, 2010 at 9:57 am #

    “If a mega brewery could make that beer (St Bernardus Abt 12) – which commands a premium price – why don’t they?”

    The same reason Wal-mart doesn’t sell Ferraris and people who are in the market to buy a Ferrari wouldn’t do so at Wal-mart. And I’m not talking about price, I’m talking about customer base. In order to get more than a few thousand beerophiles to drink their (St Bernardus Abt 12) they’d have to market the Hell out of it. Which would dilute a brand that they spend tens of millions of dollars on a year to protect.

    That’s just one answer out of a dozen or so for that question. The real answer is actually a question: “Why WOULD they?”

  9. Tim February 13, 2010 at 11:55 am #

    Derrick and Eddie pretty much answered how I would have. I just want to add one point. Small brewers seem to state that beers like Abt are not brewed by the big guys because they physically cannot. As if there is some magic in carrying sacks of grain up a rickety ladder to a 7 barrel mash tun gives them the ability to brew better beer.

  10. Stan Hieronymus February 13, 2010 at 1:36 pm #

    First – I’m regretting starting this because I don’t mean to bashing the brewers who work for multi-nationals. They are really, really skilled. And they’ve been incredibly generous in providing expertise that helps smaller breweries make better beer. You put them in a different corporate culture and things change.

    But to Eddie’s question – why would they?

    The guys running these companies are a lot more business smart (and richer than I) so I’m sure they could explain why I’m wrong.

    – Nielsen says craft beers now account for 5.8 percent of the overall beer volume. The dollar share is even higher and the margins are good. This corporations don’t give up share easily.

    – The troops selling beer get excited.

    – Street cred.

    – Because it lets their brewers work stretch themselves, which can be good for the “every day” beers.

  11. Stan Hieronymus February 13, 2010 at 2:03 pm #

    Tim – I haven’t heard that from small-batch brewers. This is something I’m trying to work out in my head. And perhaps should refine more before taking it public ;>)

    However, I would call breweries much larger than 7 barrels and quite mechanized (no toting of bags) “small.”

  12. Lew Bryson February 13, 2010 at 2:06 pm #

    Waitaminute. Nielsen says craft beers are now 5.8%? When the hell did that jump? Wasn’t it just a couple years ago we finally made it to 4%? Or is this an artifact of Nielsen’s sampling process?

    So many numbers, so many different contexts!

  13. Tim February 14, 2010 at 11:08 am #

    Stan, I don’t mean that small brewers say directly that the big guys can’t brew more flavorful beer. But statements of ‘they can’t do what we do’ seem to be worded in a way that implies that. The truth is that is doesn’t fit with the big brewer’s business model.

  14. Swordboarder February 14, 2010 at 7:55 pm #

    AB could do what we do for less, they get hops for cheap, grow their own malt and have more efficient breweries. But retail and distributor markups make the $15+ difference between the cost of goods between their beer and ours too much compared to the profit they’re making per keg.

    Now there’s the excitement of the troops factor, but it could be an argument that it would distract said troops. That said those troops have managed to make Bud Light Lime a success for the company, but we’ve already had the conversation that Bud Light Lime and Golden Wheat are distracting for the drinker, possibly encouraging them to try other beers. I do know that beer sales people too excited about a new release get distracted from their primary goal: selling the flagship.

    Street cred is worth noting, but without an attempt from them to go out and grab the market back from us with a better beer they still have cards left to play that we haven’t seen. The fact that we have this conversation means we think that they might be able to produce said beers, which at some level is enough of a street cred to keep them from being completely dismissed.

    Maybe the problem of the cooperate culture is that the brewers at these breweries aren’t looking to stretch themselves. They’re working union jobs, and if they are looking to stretch themselves, they’re looking to move up in the company, not make a new product. Now their pilot system is where they can develop these products, and the rumor is it is a place of wonder. But I don’t know too much about it. I think with a few very bright employees working full time, there’s enough literature and homebrew recipes for them to produce at least a credible product, if not a great one. The proof of that is Sandlot at Coors Field.

    I do know they can make Red Hook ESB and Widmer Hef at their production facility in Fairfield, CA. It’s also the plant that made Budweiser American Ale.

    There’s one thing that holds them back though, and that is their current reputation. If they make a craft style beer, it will likely be discredited by the craft drinkers just based upon who brewed it. Craft drinkers at some level like that revolutionary anti-corporate allure the craft brewers have. Many are shocked that Blue Moon is made from Coors and won’t drink it again. I wasn’t drinking when AB produced their first Sierra Nevada style beer that was met with staunch resistance, but I heard it was met with resistance because it was released as an AB beer.

    Now the question of, “Could they produce beers like St Bernardus Abt 12 or Dark Lord”? I believe they could and will, if not for a while yet. And when they do it won’t be under the AB name, but probably under the Michelob name. The reason is to be able to say to the craft drinker who knows AB owns Michelob, “Hey we can do some great stuff.” But at the same time not saying to the common consumer, “Bud Light isn’t the greatest beer we’ve ever made.” Then again, they could just ride their current train and if the craft beer market takes off to more than 50% of the market then they’ll still own a greater percentage of the market with Red Hook, Widmer, Kona, and Goose Island. And that’s assuming they don’t buy in to more breweries. If you look at some of the bigger craft breweries they’re aligning themselves with certain distribution houses, if at some point leaving the option open to be bought by the big guys without any problems.

    Oh dear, long post again. If I keep this up I’ll may end up formatting it like college essays if only to keep if semi-coherent.

  15. Stan Hieronymus February 15, 2010 at 8:23 am #

    We may need to get you your own blog, Dave. Seriously, thanks for the view from a small-batch brewer.

  16. Sean Inman February 17, 2010 at 12:52 pm #

    I concur with Swordboarder on this one. But I will add one other nugget.

    Large movie companies run into a similar problem. They are in the “business” of big movies that are tested and marketed and then filmed. When an independent or art house movie falls into their laps, they usually chase their tail and end up doing a great movie injustice from a business perspective.

    I believe the same about the big beer boys. I do not think they could effectively communicate to Beer Advocates or Rate beer-ians or the beer blogging community that they had actually made a quality beer. The best they can seem to accomplish is to sell American Ale to people who have grown tired of Bud but don’t have a guide or gateway into the wonderful world of craft beer.

    I believe they could make a great beer (I probably should have sampled the Michelob Brett in Denver last year) but I don’t know what they would do with it once brewed.

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